In addition to economic uncertainty, vendors in the optical market are dealing with more intensive competition and diminishing profit margins as well as seeing their largest customers cut spending and delaying purchases.
The Worldwide Optical market decreased 3.7% quarter-over-quarter and remained relatively flat year–over-year. We project that 2012 will post revenue of half a billion dollars below 2011 total spend as service providers have informed us that we should not expect a CapEx flush in the last quarter of 2012.
Bright points in the numbers show BTI continued its upward growth quarter-over-quarter (15%) and year-over-year (45%). Infinera also posted very positively, up 27% quarter-over-quarter and 10% year–over-year. Both ECI and Alcatel-Lucent were down.
We expect market consolidation because of price erosion. Some vendors will merge or sell off assets or will have to terminate product lines. All options are being explored to bolster cash balances to more normal levels.
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